Eurocontrol, the pan-European aviation support organisation, froze the bank accounts of Bosnia & Herzegovina’s air control service, BHANSA, following an arbitration in favour of Slovenian company Viadukt, BHANSA said on April 14. 

If Bosnia fails to pay Viadukt, that could lead to the seizure of central bank properties in Banja Luka, Mostar and Brcko District. Meanwhile, Eurocontrol could impose further restrictions on BHANSA's funding, which could jeopardise the air traffic in the country and force its four airports to shut down operations.

BHANSA is not directly involved in the dispute, which concerns non-fulfilment of a contract by Republika Srpska, but is a state property that could be used as a collateral for payment of the damages ordered by the court.

In a press release on its website, BHANSA said that it was informed by EUROPOL that it is freezing all further payments to the Bosnian agency upon a court order.

“Although BHANSA was not a party to this dispute, it faces the possibility of blocking the funds necessary for the smooth running of air navigation. In order to find an urgent solution and ensure the continuity of operations, BHANSA is intensively cooperating with the competent institutions,” the agency said.

N1 reported that, following the warning by Europol, BHANSA has lowered the wages of its employees to secure some funds for operations.

“The account blockade prevents BHANSA from operating normally, with route charges — comprising 90% of its budget — currently inaccessible. To mitigate the impact, BHANSA has implemented precautionary measures, including salary reductions for the previous month. This decision was made in consultation with union leaders to ensure transparency, legality, and the protection of employees’ rights,” the agency said in a statement to N1.

Back in June 2024, Viadukt initiated forced recovery proceedings against Bosnia to recover €46mn in damages over a failed hydropower plant project.

Republika Srpska, one of the two entities in Bosnia & Herzegovina, lost an arbitration case filed with the London Court of International Arbitration (LCIA), which ordered the entity to pay €46mn to Viadukt, stemming from the termination of the contract for the construction of the hydropower plant on the Vrbas River.

The debt, accruing interest at a rate of almost €10,000 per day, has grown by approximately €250,000 since the beginning of May last year.

On April 14 Nermin Niksic, the prime minister of Bosnia’s other entity, the Muslim-Croat Federation, blocked a decision of the country’s fiscal council to use the central bank’s profit for 2024 to pay Viadukt. Niksic said, as quoted by N1, that his entity will not pay Republika Srpska’s debt. Relations have worsened between the two entities after secessionist threats by top Republika Srpska politicians. 

“We shall not give FBiH’s money to separatists in RS to cover their debt. Period. When it is time to pay their dues, suddenly Bosnia & Herzegovina is acceptable, and the budget can be used,” Niksic wrote on Facebook.

“In 2017, the Republika Srpska government unconditionally committed to settling all financial penalties, with then-prime minister Zeljka Cvijanovic signing the agreement. They must fulfil their obligation – the Federation of Bosnia & Herzegovina will not and it is not obligated to do so. It is clear that the Federation of Bosnia & Herzegovina is the more developed, stable, and financially superior entity in this country,” Niksic also noted.

If the state pays the debt, the Federation as the larger entity will take over two-thirds, while Republika Srpska will pay just one-third.

The dispute between Viadukt and Republika Srpska dates back to 2004. At the time, Republika Srpska’s government granted a concession to Viadukt's subsidiary, HES Vrbas, for hydropower plant construction on the Vrbas River. However, later the same year, Republika Srpska also awarded a concession for HE Bocac 2 to its state utility company Elektroprivreda RS, effectively blocking Viadukt's original project. Viadukt initiated arbitration in 2014.